AJOC EDITORIAL: House Majority has lost. They just don’t know it yet.

The once high-riding Democrat-led Majority in the House had a stake driven through its heart on June 5 when it was abandoned by Gov. Bill Walker, its one-time ally on raising oil taxes and bringing back a state income tax.

By immediately rejecting Walker’s compromise package that did not include an income tax, increased oil taxes or their preferred amount for the Permanent Fund Dividend, the rookie leaders of the House have set themselves up as the fall guys if the government shuts down with no budget by July 1.

It may be just posturing, as Senate President Pete Kelly mused while his caucus took a more measured and conciliatory attitude toward Walker’s proposed compromise that came down heavily in favor of its position.

Are the House Democrats really so wedded to their demand for an income tax that they are willing to push the state to the brink of a shutdown?

So far, they sound like it.

Not that it was ever a great idea to hitch their policy wagon to raising taxes on an economy in recession, but House Democrats are quickly becoming Ahab to the white whale of taxes.

With the governor now essentially aligned with the Senate on the greatest issues facing the Legislature — including its plan to pay off nearly $300 million in old oil tax credits using the Statutory Budget Reserve — the House has set itself up as the odd man out.

No doubt it must be a bitter pill to swallow considering it was just seven months ago the new Majority held a celebratory press conference following the November election as Democrats took the reins of power in the House for the first time in more than a decade.

However, the Democrats have no one to blame but themselves for their current predicament.

They overreached by ratcheting up their usual attacks on the oil industry with a bill to double and triple effective tax rates between $50 and $75 per barrel, refused to cut the budget by any measure, set up an overly generous PFD and attempted to pay for it by extracting $700 million per year from Alaskans’ paychecks.

The House proposals would be disastrous for the economy and it appears clear that the Senate Majority won over the governor when we heard Revenue Commissioner Randall Hoffbeck essentially repeat the Senate talking point that the House income tax proposal could end up overfunding government and therefore remove incentives to spending restraint.

Who knows what ultimately won over the governor on oil taxes and credits, but two events in the prior week may have played a part.

First there was Interior Secretary Ryan Zinke doing more for Arctic oil development with a stroke of a pen than Walker has accomplished halfway through his third year in office.

Then there was the announcement by Caelus Energy that it was postponing its appraisal well at Smith Bay for this winter based partly on low oil prices and partly on the uncertainty about what the rules will be for tax incentives and the hundreds of millions in unpaid credits of which the company is owed at least $100 million.

There has been plenty of fallout from the governor’s veto of $630 million worth of credit appropriations in the past two budgets, but this was a highly visible and hardly encouraging development.

What we learned June 5 is that the governor has been listening, and that the House still has its ideological earplugs in.